27 September 2011

Developed economies had for long been regarded as immune to major breakdown. We now know differently. Decades of structural challenges, coupled with poor financial controls and sheer human greed, have left Europe and America with, as Harvard economist Dani Rodrik rightly puts it, “debilitating challenges”.

That’s bad news for the citizens of developed countries. And, yes, the crisis poses challenges for Africa, too. However, the challenges now faced by developed economies also present a unique opportunity to close the gap between developing and developed economies. Rodrik says of Europe and America’s fragile recovery: “In such an environment, rapid growth in the developing world is the only thing that could propel the world economy forward and generate increasing demand for rich-country goods and services – the only silver lining in an otherwise dreary future.”

I agree with Rodrik. Africa and Asia have the potential to become the epicentre of the global economy. That moment in economic history is now. Our immediate aim must be to fully unlock that potential and turn it into historic outcomes.

The questions we must now pose ourselves are the following: what are the drivers of unprecedented growth in Africa and Asia? And, perhaps more importantly, what must Africa and Asia do, immediately, to capitalise on this historic opportunity to converge on developed economies?

The central thought I want to build a case for is that global economic power is shifting, albeit slowly, from Europe and North America to Africa and Asia.

Africa and Asia have already learnt the important lessons of the debt and financial crises of the 1970s, 80s and 90s. African and Asian economies learnt, through bitter experience, the importance of sound macroeconomic management. They also came to appreciate that the state and the market needed to work in partnership, and that the liberalisation of capital accounts and markets was not a panacea for growth.

But, more is required of Africa and Asia in order to sustain growth levels in the future, and it is worth exploring what else, beyond the conventional wisdom, might ensure that Africa and Asia become the dominant players in the world economy, soon.

So what are the big, little-known truths, about Africa and Asia?

Fifty years ago most of Asia was at least as poor as Africa. South Korea had the same income level per capita as Sudan and Ghana’s citizens were richer than virtually all the Asians. As recently as 1982, average per capita income (PPP basis) in developing Asia was less than half that of Africa, but by 2008 Asia’s per capita income was double that of Africa. Put another way, in the last 20 years per capita incomes in Africa have slightly more than doubled, while incomes in developing Asia have jumped by nearly 11-fold.

China in particular has achieved what no country in history has done, doubling per capita incomes every 10 years over a period of 30 years. Through concerted leadership, China is transforming from a rural to a manufacturing economy which has meant that over a period of approximately 25 years, roughly 600 million people were lifted out of poverty. This meant a decline in poverty rates from 85% to 15%.

Whereas, currently, Africa accounts for just 2% of global GDP and Asia a further 25%, by 2050 Africa’s contribution will have risen to around 5% and Asia’s to an astonishing 50% so together they will account for well over half of global GDP. Over the next five years Africa is likely to take the lead with the highest average growth rates and will become the fastest growing continent.

This trajectory stays the same even if we take a slightly longer term view. Over the next decade, for example, many economists are forecasting that Africa will grow at an average of 7% per year, thereby maintaining its position as the most rapidly growing continent.

It is natural, of course, to wonder what the sources of these growth forecasts are. OECD countries, for example, have never achieved these average levels of growth for even a five-year period, let alone sustained over a number of decades. This fact alone points to deep differences in the sources of growth. It is critical, for precisely this reason, that we be wary of cutting and pasting solutions from one region of the world to other regions without taking full cognisance of structural differences. Indeed, even talk about “Africa” and “Asia” belies the reality that different economies within these regions themselves differ in salient respects.

Part of the growth spurt is, nonetheless, linked to significant general differences between Africa and Asia, on the one hand, and Europe and North America, on the other.

Some of the differences include Africa’s demographic transformation – the doubling of the population in the coming decades, rapid urbanisation and a youth bulge; the extent of arable land on the continent; and the extensive and accessible commodities which, in turn, create significant manufacturing, trade and investment opportunities.

Of course, even the demographic transformation is a double-edged sword. On the positive side, a growing population implies greater demand for goods and services which, in turn, translate into increased economic opportunity and activity.

Beyond the economic benefits of increased consumption, there are also benefits for various industries that flow naturally from this demographic transformation. In countries such as Angola, for example, the construction industry is in boom because the reality of rapid urbanisation is, precisely, that new infrastructure must be built.

Africa’s demographic trends count powerfully in favour of sustained growth. Africa’s workforce will become the world’s largest by 2040. Already, there are over 500 million people of working age, and there will be over 1.1 billion by 2040. Africa is in the position to reap the demographic dividend of a bulging youth population, at a time when all other regions, and not least Europe, are entering a period of dramatically increasing dependency ratios.

There are, fortunately, already positive signs of human potential in many developing countries being successfully harnessed to achieve demonstrable economic output. The number of engineers that are produced in India, for example, leave Europe and North America with little hope of successfully competing with India for scarce engineering talent.

What we need, however, is for the human potential of all the citizens of Africa and Asia to be similarly developed. Pockets of excellence are worthy of praise. But they must be replicated across the regions.

The point to be taken to heart is a strategic one: an educated, healthy, highly skilled and self-sufficient workforce must be the foundation of an emerging markets success story.

Education is critical. Health is critical. Partnership between governments, civil society and the private sector, glued together by a mutually beneficial vision of an alternative reality for Africa and Asia, is crucial.

So, Africa’s and Asia’s demographic transformations, if exploited with appropriate policy interventions, can indeed be the catalyst for bringing about the growth forecasts I started this article with. Africa’s GDP is approaching $2 trillion, larger than Brazil’s, with its consumers spending around $900 billion per year. Within 10 years, around 2020, its GDP will have grown by a further trillion, consumer spending will be close to $1.5 trillion and the population will be well over 1.5 billion.

These changes will be effected across multiple parts of the economy. The four groups of industries which together will be worth over $2.5 trillion in annual revenues in Africa are:

22 September 2011

Dar es Salaam, Tanzania — Tanzania is set to venture to export a rare earth, bastnaesite, following the discovery of a wide zone of the rare earth of the low grade earth material used mainly in the production of hi-tec products

The rare earth mineral has been discovered in the course of drilling done by a Canadian firm, Montero Mining and Exploration Ltd, at the Tumbili target at the Wigu Hill Rare Earth Project some 170 km south-west of Dar es Salaam city, and 68 km south of Morogoro.
According to the Minister for Energy and Minerals Resources, William Ngeleja, said the discovery shows Tanzania has huge potential for mining, and urged small Tanzanian miners to venture into the exploitation of such rare minerals.

"The Government will look for ways and means to help small miners around Wigu Hill to access the deposits according to the laws of the land," said the Minister.

He said that the Wigu Hill's first competitive advantage is that it is simple carbon material, unlike many rare earths which are found in deposits that are complicated by radioactive materials or silica, creating all kinds of processing, and costs.
Mr Tony Harwood, the President and Chief Executive Officer of Montero Mining and Exploration Limited told The East African Business Week in Dar es Salaam that the completion of a 1,525m drilling program at the Tumbili target on the South East side of Wigu Hill carbonatite complex and the discovery of a broader zone of mineralized carbonatite breccias will now map Tanzania among the Rare Earth producers in the world.

He said at present China produces 97 % of world supply of Rare Earth Elements (REE's), and due to the 21st Century technological progress and environmentally sustainable development associated with the rising prices of REE's and China's control over export quotas, it is becoming imperative that the rest of the world develops new rare earth resources to meet the increasing demand from 'green technology.'

Demand for rare earth metals is likely to rise by 48% due to digital revolution and popular hi-tech products such as iPods and smartphones.

The 2nd Africa-India Forum Summit which was held in Addis Ababa, Ethiopia in May 2011 set the stage for dynamic and vigorous engagement between India and Africa. In 2010, bilateral trade stood at US$46 billion; this is expected to reach US$70 billion by 2015. The resilience exhibited by the African and Indian economies during the recent financial crisis has strengthened the belief that this partnership holds great promise for the future. Africa’s economy has expanded by 4.7% in 2010 and is expected to grow at more than 5% in the coming years. The Indian economy, on the other hand, grew at 8.6% in 2010-11 and is projected to grow at 8.2% in 2011-12.

India-Africa Business Partnership Summit provides the much needed platform to businessmen and policy makers on both the sides. Continuing with its endeavor of spearheading a comprehensive economic engagement between Indian and African economies, FICCI, with the support of Ministry of Commerce and Ministry of External Affairs, Government of India is organizing India-Africa Business Partnership Summit on 12-13 October, 2011 at Hyderabad International Convention Centre, Hyderabad.

The business summit would bring together the stakeholders like Ministers, CEOs, Managing Directors, Heads of Department of various corporate, Independent Consultants and many more, of the select priority sectors, from the economies of Africa and India at a common platform to share and showcase business opportunities for Indian and African companies.

Summit highlights:

• Two day international conference with specific sectoral round tables to gain insights into the African and Indian markets

• Two day exhibition to showcase the leading players in the identified sectors

• One to one business meetings with the captains of industry and visiting government officials for trade, investments and joint ventures

• Unit visits of the identified visiting delegates to your facilities on mutual consent and interest could also be organized (at own your own cost)

5 September 2011

Ubbink East Africa has built a $2.7 million solar panel factory in Naivasha, Kenya. Ubbink East Africa Managing Director Haijo Kuper said during the official opening ceremony that the company will be producing 100 solar panels per day at the new facility, noting, "Our prices are at par with our competitors. The market is huge. As one of the sunniest continents on the planet, Africa gives solar applications like LED-lighting, mobile charging, water pumps, street lighting very short pay-back times thus minimizing pollution levels."
Ubbink East Africa is currently manufacturing solar panels with outputs of between 13 and 120 watts, targeting rural households. Ubbink East Africa is a joint venture of Ubbink B.V - a wholly owned subsidiary of Centrotec Sustainable AG- and Chloride Exide (Kenya), its local partner, and is the first to make photovoltaic (PV) solar panels in East and Central Africa, Nairobi’s Business Daily reported.
Centrotec Sustainable AG CEO Gert-Jan Huisman said that almost 98 percent of the rural population in Africa does not have access to grid electric power supplies, and this was holding back rural economic development.
Solar panels have the added advantage of being environmentally friendly, as most common energy sources in the African countryside are currently highly polluting kerosene lamps and diesel generators.
By. Joao Peixe, Deputy Editor OilPrice.com

ENL Property, a unit of Mauritian company ENL Land Ltd. (SAVA), plans to build an $80 million shopping mall in Zambia as it expands in sub-Saharan Africa, Chief Executive Officer Gilbert Espitalier-Noel said.
The 25,000 square-meter (269,000 square-foot) project will be developed in Lusaka, Zambia’s capital, with South Africa’s Atterbury Investment Holdings, Espitalier-Noel told reporters today in Ebene, south of the capital, Port Louis.
ENL Property’s current developments total 20 billion rupees ($711.7 million), including residential projects and shopping malls. ENL and Atterbury’s first project is the 3.5 billion- rupee Mall of Mauritius at Bagatelle, a 42,000 square-meter development due to open on Sept. 29, it said.
The Zambian project is a stepping stone in Africa and part of the company’s “logical expansion” as it prospects other sub-Saharan countries such as Tanzania and Mozambique, Espitalier-Noel said.
To contact the reporter on this story: Kamlesh Bhuckory in Port Louis via Johannesburg at 1933 or gbell16@bloomberg.net

Cameroon, Africa’s fourth-biggest cocoa producer, plans to spend 175 billion CFA francs ($379 million) on constructing roads over the next 10 years.
The central African nation will build 350 kilometers (217 miles) of roads each year, Francois Felix Ewane, technical inspector at the Ministry of Public Works, said in an interview in Yaounde, the capital, today.
Cameroon’s roads, of which 5,000 kilometers or 10 percent are paved, are degrading as traffic increases an average of 5 percent each year, according to the ministry. Only 6 percent of roads are said to be in a good state, 21 percent are classified as normal, while 70 percent are mediocre and 3 percent in a very poor state, the ministry’s statistics showed.
The routes will be built around the country, including in the cocoa-producing south, center and east regions. Cameroon follows Ivory Coast, Ghana and Nigeria as the continent’s top cocoa growers. It also produces robusta and arabica coffee for export.
To contact the reporter on this story: Pius Lukong in Yaounde via Accra at ebowers1@bloomberg.net.
To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net